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CIC to Pull Out of Bumi Resources’ $362 Million Share Sale

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China Investment Corporation (CIC), a major Chinese sovereign wealth fund, exited out of a debt-for-equity swap with Bumi Resources. CIC pulled out of the deal over a disagreement over deal terms. CIC has massive bargaining power and its hard for the Asian giant to accept a deal premium from Bumi, especially from a differential in share price valuation. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Petrobras to Spend $320 Million to Hedge Portion of Oil Production

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Revealed on March 22, 2019, Petroleo Brasileiro SA (Petrobras) spent US$ 320 million on put options as a hedge. Brazil’s state-owned oil company bought the options to hedge part of its crude production for 2019. This is at an equivalent of US$ 60 per Brent oil barrel. The options will expire by the end of 2019.

The put options enable Petrobras to deliver oil at US$ 60 per barrel, but not the obligation to do so.

In a securities filing, Petrobras said, “The strategy is to hedge the export operations expected for the year, that way partially protecting the company’s operational cash flow.”

To compare to 2018, Petrobras is spending less on options in 2019. Petrobras had put options at US$ 65 a barrel, covering 128 million barrels.

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Storebrand Generates Steady Returns for 2017 and 2018

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Norway’s largest private asset manager, Storebrand, had a 13.7% return on equity in 2018. Storebrand now has total assets under management of US$ 82.6 billion. The staggering results topped 2017’s returns of 11.3%. Odd Arild Grefstad, CEO, was keen to point out that “2018 was a good year,” in Storebrand’s annual report. Grefstad also reflected on the peculiarities that were overcome during the year: “Our financial solidity was strengthened and there was an increase in the dividends distributed to shareholders. At the same time, the financial markets experienced turbulence at the end of the year, in a somewhat uncertain macroeconomic situation.”

Last year, new initiatives were implemented to bolster sustainable investments. The fund is also pushing to improve water management. Another investment coming this year will address deforestation. That will include tackling soy and palm oil farming, and cattle ranching. Grefstad addressed Storebrand’s “green” priorities: “The financial industry is an important contributor in the efforts to limit global warming, and we have a clear strategy . . . we have strict environmental, climate, and sustainability criteria for all our investments.”

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Biogen and Eisai Battered by Markets Over Alzheimer’s Trial Fail

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Cambridge, Massachusetts-based Biogen Inc. (BIIB) took a tumble of 28% in the morning of March 21st after it announced that it would cease its Phase 3 trials of Aducanumab. The therapy was intended to slow cognitive decline in patients with early onset Alzheimer’s. Biogen continued falling on March 22, 2019. Biogen and its Japanese development partner Eisai Co., Ltd. (ESALY) shared that the decision was based on results from an analysis conducted by an independent committee. The analysis determined that the trials were not going to demonstrate that Aducanumab could slow cognitive impairment. Eisai also fell 28% on the day, though it staged a relatively modest recovery on March 22nd. Some large institutional holders of Biogen include APG Asset Management (manager of Stichting Pensioenfonds ABP), Norges Bank Investment Management (manager of Norway Government Pension Fund Global), and Swiss National Bank.

The last time a treatment for Alzheimer’s made it to market was in 2003. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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